Micron shares dropped 6% in premarket buying and selling after the chipmaker’s current-quarter revenue forecast didn’t impress buyers. Â
| Photo Credit: Reuters
Micron shares dropped 6% in premarket buying and selling on Thursday after the chipmaker’s current-quarter revenue forecast didn’t impress buyers on the lookout for outsized outcomes powered by the AI demand surge.
The chipmaker forecast fourth-quarter revenue of $7.6 billion, plus or minus $200 million, according to analysts’ common estimate even as the corporate mentioned it had “sold out” its high-bandwidth reminiscence (HBM) chips for this 12 months and the subsequent.
Micron is one of the few suppliers of HBM chips that energy the world’s most superior AI techniques, permitting the corporate to money in on surging demand for semiconductors and driving up its inventory 67% to this point this 12 months.
“Anything less than fantastic is not good enough when your share price got multiplied by three in just about 18 months,” mentioned Ipek Ozkardeskaya, senior analyst at Swissquote Bank in a observe.
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The chipmaker is ready to lose $10 billion at present share value ranges of $133.25. Peers Nvidia, Broadcom , Intel and Qualcomm have been additionally down 0.2-2% in premarket buying and selling.
“The market reaction underscores the high expectations for every company that is part of the AI ecosystem,” mentioned analysts at Saxo Bank.
Some analysts, nonetheless, have been constructive concerning the agency’s finish markets, after the corporate beat estimates for third-quarter revenue.
Goldman Sachs’s analysts view the inventory’s pullback “as an opportunity to add to positions” as the brokerage continues to see market share features for the corporate within the profitable HBM chip market.
Piper Sandler’s Harsh Kumar had an analogous view. “At a high level, end markets for MU continue to improve with demand increasing and supply still relatively tight.”
“We envision that these conditions will continue to persist at least through the vast majority of 2025 as well,” Kumar added.
At least two brokerages raised their value targets following the outcomes. Micron has a 12-month ahead price-to-earnings ratio of 17.07, in contrast with AI darling Nvidia’s 40.22 and the trade median of 23.46, based on LSEG information.